Kenya sets up fund for international bodies annual fees

Delegates during a past Comesa conference on trade in Nairobi. PHOTO | FILE 

By GEORGE OMONDI omondi@ke.nationmedia.com

In Summary

• Treasury secretary Henry Rotich said 10 per cent of the import declaration fees (IDF) would henceforth be deposited in a special kitty.
• Kenya has an annual subscription fees obligation of Sh679 million to international bodies such as the UN, AU, COMESA, IGAD, and EAC.
• According to Foreign Affairs PS Karanja Kibicho, Kenya owes more than Sh700 million in subscription bills to the regional bodies.

Importers will start paying Kenya’s annual subscription fees to international bodies such as United Nations and the African Union (AU) as the country moves to clear its arrears and ease the burden on the Treasury.

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Treasury secretary Henry Rotich said 10 per cent of the import declaration fees (IDF) would henceforth be deposited in a special kitty called the African Union and other International Organisations Subscription Fund.

The IDF is charged at the rate of two per cent of the customs value of the goods shipped into country for home use.
“The account of the fund shall be opened and maintained at the Central Bank of Kenya,” says Mr Rotich in a legal notice dated January 30.

“All receipts, savings, balance and accruals of the fund at the close of each financial year, shall be retained for the purpose for which the fund is established.”

Kenya has an annual subscription fees obligation of Sh679 million to international bodies such as the UN, AU, Common Market for Eastern and Southern Africa, Intergovernmental Authority on Development (IGAD) and the East African Community.

The country joined the list of key defaulters a year after President Uhuru Kenyatta took office with its arrears hitting $8 million (Sh824 million).

About Sh31.5 billion was raised on the Sh1.577 trillion that Kenya imported last year as IDF, meaning about Sh3.2 billion would be deposited in the special fund at the start of this year if the new law were in place.

Kenya has faced difficulties in meeting its financial obligations to various regional bodies such as the AU and IGAD on inadequate allocation by the Treasury.

Foreign Affairs PS Karanja Kibicho disclosed Kenya owed more than Sh700 million in subscription bills to the regional bodies and had on a number of occasions been barred from voting or participating in major decisions affecting the region.

Instead of allocating membership subscription as part of Foreign Affairs ministry budget, the Treasury has assumed direct control of the fund, which will enable the PS to release cash to the international bodies when obligations fall due.

“The principal secretary of the National Treasury is hereby designated as the officer administering the fund,” states Mr Rotich in the legal notice.

“In the event of winding up of the fund, the cash balances shall be transferred to the National Exchequer Account while other assets of the fund shall be transferred to the National Treasury.”

The decision represents a departure from Treasury’s September proposal to introduce a new levy — 0.2 per cent of imports for the purpose.